Ecuador's Correa says mining contracts "within days"

Reuters Staff

3 Min Read

* Two miners set to invest $3 bln in copper, gold projects * Miners have agreed to gov’t demands- top mining official

By Eduardo Garcia

QUITO, Nov 24 (Reuters) - Ecuador’s President Rafael Correa said on Thursday his government is “within days” of signing contracts with mining companies set to develop large copper and gold projects in the mineral-rich Andean nation.

The negotiations have been long and difficult, in part because the government was asking companies to pay an 8 percent royalty share, whereas miners were offering 6 percent.

“We’re negotiating the contracts very hard ... They will be signed in the next few days,” said leftist leader Correa, who has also renegotiated part of Ecuador’s foreign debt and oil exploration contracts with foreign companies.

The government is demanding advance payments on royalties before the miners start extracting, the president added in comments on local radio.

The extra income from advance royalty payments would be used for social projects, including schools and roads, Correa said. In power since 2007, he has made resource nationalism a centerpiece of his policies and may run for another term in an election due in January 2013.

Kinross plans to develop Ecuador’s largest gold project, Fruta del Norte, while Ecuacorriente - an affiliate of Canada’s Corriente Resources - will work on the Mirador copper mine.

ROYALTY NOT YET DETERMINED

Correa did not say how much royalty the miners would be paying, but mining sources familiar with the negotiations say the final percentage will likely be closer to the figure demanded by the government.

“Mining companies have agreed to the demands of the Ecuadorean state and we’re completely satisfied,” said Auquilla, the government’s top mining official, during the same radio show.

Correa has had a tumultuous relationship with foreign investors throughout his rule, revising oil contracts to better favor the government and defaulting on the nation’s debt.

He is striving to diversify the Ecuadorean economy from crude exports, and he has taken a softer approach to investors planning to develop mines than the oil companies with large investments in the OPEC member country.

Ecuador has a nascent mining industry. Some larger projects were initially delayed as Correa’s government tightened regulations for the sector.

Ecuador is also negotiating contracts with International Minerals over its Rio Blanco gold-silver project, with Ecuacorriente over its Panantza-San Carlos copper deposit and with IAMGold , which plans to develop the Quimsacocha gold-copper-silver mine.

High oil prices have allowed Correa to increase social spending this year, which has fueled economic growth and boosted his popularity among the majority poor.